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Benzene inventory increases, prices under pressure

2021-11-26 09:20:27 CCFGroup

China's benzene inventory increased apparently since late October and stood above 100kt again after staying low for around five months.

Benzene inventory increased by around 24.3kt week on week to 155.1kt in East China ports on Nov 24, according to data released by CCFGroup.

Around 19 ships of benzene cargoes are scheduled to arrive in China in the first half of December with around 57,000 tons. Given the cargo arrival schedules, some market participants believed that the port inventory might reach around 200kt.

According to China Customs, China imported 308.8kt benzene in October 2021, up 64.8kt or 26.56% from September, and up 195kt or 171.59% year on year. In the first 10 months of 2021, China's benzene imports totaled 2.34 million tons, up 247kt or 11.77% from 2.1 million tons in the same period last year.

As for the price, East China benzene has fell below 7,000yuan/mt in mid-November. However, in the same period last year, East China benzene was only around 4,000yuan/mt. In terms of demand side, capacities of CPL, styrene and aniline increased around 20% year on year. However, the actual operating rates were lower this year. In November, SM operating rate was around 13% lower year on year and CPL operating rate around 17% lower. The actual demand increment for benzene was quite limited.

With the capacity expansion of styrene in China, the import has dropped sharply in 2021. As a result, styrene exports from South Korea and USGC markets decreased apparently. Coupled with the decrease in operating rate due to weakening margins, US benzene import decreased by around 14% hits year. And most of those cargoes were consumed by Chinese market. China's benzene import for the whole year of 2021 is expected to increase by around 38% year on year.

Looking ahead, benzene imports are expected to keep high in November and December. Some market participants still expect further decrease for benzene prices, despite the upcoming startups of styrene units.

Wanhua Chemical plans to start its plant in H1 Dec, 2021 and ZRCC-Lyondell and ZPC II would be in end Dec. Startups of other units are likely to be postponed. So the actual demand increment for benzene would be limited in Dec. Meanwhile, styrene prices decreased apparently in anticipations of new capacity startups and weakening demand, which also weigh down benzene prices. In short term, China domestic benzene market is likely to keep weak.

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